We despise you and dislike you, but please gringos send some dollars, the arepa project ain’t working well

April 16, 2010

It was a remarkable strategy, as Hugo spewed his usual vile against the imperialists and the Empire, Minister of Energy and Oil and President of PDVSA was in Washington, looking for US investment in Venezuela’s oil industry. Ramirez said the US “can’t miss this opportunity”, as if everything was normal in the relations between the two countries.

But wait, the US has no Government oil companies and most oil companies whether US based or not, simply were not that interested in what PDVSA and Ramirez had to offer. In fact, the Carabobo oil field only managed to sell two of the three projects, for reasons that go from high royalties, to high taxes, to PDVSA cpntrol, to no international arbitration to quationable financing.

So while the deranged leader spewed out his best stuff here, Ramirez was in DC, asking and lobbying for a meeting with the US Secretary of Energy in a clear sign that the Government of Venezuela or someone in it knows that that there is a serious financing problem going forward. So serious that we let Chevron get a piece of Carabobo and if Obama asked nicely, we may give an oil company of his choice the field that nobody wanted.

A truly amazing spectacle and turn around. What’s next? Alvarez Paz as Chavez’ VP?

But the truth is that to undo what Chavez has so carefully worked on in the last eleven years will not be easy. Both US and European oil companies distrust PDVSA and Venezuela and have better places to invest their money than in the overall uncertainty of a Venezuela with law. order, money and electricity.

At this time, it looks very difficult for these projects to ever be completed unless oil soars to $150-$200. PDVSA simply has no money. In fact, it is my personal opinion that the economic puzzle of how come if oil is up, the swap rate is also up, CADIVI outflows are down and international reserves are also dropping (even if Fonden money is ignored) has a simple answer: PDVSA has not been handing over enough foreign currency to the Central Bank because of its own cash flow problems.

So, Ramitez comes to Washington with his hat in hand, reversing Giordani’s ten year old promise that he would need to use his hat to get rid of all of the investors trying to get in Venezuela.

But I doubt he will accomplish much. The changes made are simply to vast to make Venezuela interesting at this time.

Somehow, even the simplest projects are not working. To begin with, any PDVSA controlled project implies a limit of Bs. 12,000 per month to the highest ranked engineers, while independent contractors offer four to six times more. Ad to that that the company is supposed to be everything to everyone and the whole thing is simplynon-sensical.

Meanwhile at the other end of the spectrum, the “Arepera Socialista” that started operations barely three and half months ago, is already in trouble: The “solidarity” price of Bs. 5 per arepa, had to be increased by 50% to Bs. 7.5, as the reality of such silly things like markets, inventories and costs hit the project. I guess Saman is no longer a volunteer, and cheese went up, and they paid a penalty for too much electric consumption or did not open often enough. Of course, if the idealists increase prices by 50% it is not speculation, it is good management and nobody goes after them. It is the oligarchs that can’t increase prices.

So, please my good gringo friends, we have always admired you in our revolutionary Government, we just had to express hate and dislike because we only care about getting elected and being anti-US is very popular. So, please send us some dollars, we really don’s care if oil projects are not working well, but when our incompetence affects serious stuff like eating arepas on the cheap, it is time to invite you back.

56 Responses to “We despise you and dislike you, but please gringos send some dollars, the arepa project ain’t working well”

  1. Roger Says:

    A few posts back we have Chavez buying weapons from Russia to protect Venezuela from an invasion by Colombia and the US. Today they want to invite the US in as a business partner! Are the Colombians invited too? Sunday will Chavez rant about the US not investing Vernezuela and letting down a country that depends on US imperialism!

  2. Juancho Says:

    “…no international arbitration.”

    Not only is this too big a gamble for American’s to go for, what is the rationale in the first place for refusing arbitration unless you you reserved the right to defraud? Chavez thinks he can do business on his own terms with other people’s money?

    No, Senor.

    Juancho

  3. Gringo Says:

    I will go to a used book store and find a copy of Galeano’s Open Veins of Latin America, the book that Thugo presented to Obama, to send to the Venezuelan embassy, so that they can distribute it to gringo investors.

    That book would make gringos really interested in investing in Latin America.

    Who needs international arbitration when you can read Galeano?

    Here is a golden oldie from 2004 : Statement of the Embassy of Venezuela Before the Senate Committee on Energy and Natural Resources. PDVSA’s 2004-2009 business plan is both ambitious and realistic. The plan calls for an increase in crude oil production capacity from the current 3.8 million barrels per day to more than 5 million barrels per day by 2009. While this increase will be achieved principally from substantial investments by PDVSA, there will also be sizable investments by foreign oil companies – including U.S. companies – in Venezuela. Under the business plan, a total of $37 billion will be invested in the Venezuelan energy industry over the next five years. Foreign companies will account for 26 percent of this total. PDVSA’s plans provide tremendous business opportunities for U.S. companies. In addition, Venezuela has a legal framework in place that allows for foreign participation up to 49 percent in upstream activities, 100 percent in downstream activities, and 100 percent in natural gas projects.

    Yeah, right.

  4. HalfEmpty Says:

    PDVSA has not been handing over enough foreign currency to the Central Bank

    There it is. ^^^ Tried to slip in the Defcon 5 warning and hide the siren behind Bolivarian arepera hilarity.

    Seriously, that’s a sign of game up, call in the dawgs, pack the go-bag and make sure the cats have a good home.

  5. captainccs Says:

    Surely Putin, Evo, Ahmadinejad, Castro or one of his other friends will come to the rescue. They always do!

  6. Arturo Says:

    Wihtout even Googling why don’t you tell your readers that there are at least three Eurpean oil companies working in the faja – Repsol, Total and Statoil. There are at least two gingo companies Chevron Texaco and Conoco Philips.

    As usual, manipulstion by omission which is the same as lying you sick fanatic.


  7. Thank you arturo, once again you don’t get it and you dont read the article. I do say Chevron got one field, but you must not have read that part. It is Venezuela that now needs the gringo money, because your precious Government could not manage an arepera correctly. Thank you for the insults, coming from a true lunatic and fanatic, they are a compliment.


  8. And learn your facts before commenting , conocophillips was kicked out of Venezuela and its property nationalized without compensation, the company is suing Venezuela in the World Banks arbitration Court for US $ 20 billion. They are not operating in Venezuela, both Total and Statoil decided not to bid in Carabobo and Junin , tge same projects that Ramirez is looking to sell because there were no takers, so As usual your point is worthless

  9. Roy Says:

    In addition to Miguel’s rebuttal of Arturo, I would note that oil companies take a long view in their investments. While none of the foreign companies are interested in risking much of their money at present, they know that dictators come and go. Meanwhile, if it can be done without too much exposure, it is always a good idea to maintain a presence in country. In this way, they will be in a better position to take advantage of new opportunities that present themselves when the situation changes.

    Most companies will accept a short-term loss simply to keep their foot in the door or (in the case of retail products) maintain their brand-name recognition and customer loyalty.

  10. Tambopaxi Says:

    I’ve said it before and I’ll say it again: Any foreign oil company investing any money in Venezuela is nuts, or betting that Chavez will be out (one way or another) before he can pull his usual bait-and-switch game, and rip off their investments…

  11. HalfEmpty Says:

    Any foreign oil company investing any money in Venezuela is nuts, or betting that Chavez will be out (one way or another) before he can pull his usual bait-and-switch game, and rip off their investments…

    Investing in Venezela right now is border-line breach of fiduciary responsibility.

  12. Roger Says:

    Several thing to bear in mind: Most Big Oil companies are multi-national and the relationship between companies with the same Brand Name in different countries is well, not often clear. Many you see in Venezuela are in fact local companies not much different than a McDonalds Franchise! None of them or even private investors are going to invest much in a place where contracts have no value. Even governments can no longer invade to protect their interests. Then there is the question of why they would be talking to the US Government. The only Oil Company that the US owns is the US Naval Petroleum Reserve. The Tea Pot Dome field being the most famous. Hum. A US Naval Base at Cerro Negro, works for me!

  13. m_astera Says:

    Slightly OT, but anyway:

    If one were a shareholder in a large company that needed to be efficiently run and profitable, which would be the better way to select a company president?

    a. Have the most promising candidates interviewed by intelligent and educated experts in the various fields the company worked in, then make the selection based on the most qualified candidate.

    b. Allow anyone to be a candidate, even those who have no business experience, education, or track record of accomplishment, and let the entire company vote for the candidate who promises them the most benefits for the least personal effort.

    The second option is called democracy. It has never worked and never will.

  14. Antonio Says:

    Arturo

    Who are sick fanatics?

    Let me tell a new. After the installation of Fidel bust in “Bicentenanio” Boulevard. Chavez and “elements” of the PSUV will try to force to close the Macdonalds and Wendys installed in that zone.

    They do not mind that MacDonald and Wendy are franquicia that is bought or rent (the image and patents of the foods) by Venezuela investor, with Venezuelan money and represent Venezuelan jobs (because the workers of these Wendys and MacDonalds are not gringos, they are Venezuelans) that maintain Venezuelan families. These all will be lose because an ideology.

    They are really very sick fanatics.

    Sick to my stomach.

  15. Greg Says:

    It’s so characteristic of the Venezuelan government to waste energy visiting Washington instead of courting companies who have money to invest.

  16. Impartial Says:

    As I witness the events unfolding during the last few months, my only conclusion is that something’s gotta give. It won’t be pretty, I think we all know that, but it is better faced sooner than later.

  17. deananash Says:

    m_astera, yes, Democracy is messy and does get things wrong. As of yet, ALL systems get some things wrong.

    However, of all the political systems that have been developed, democracy has proven itself far superior to the rest.

    And don’t even start with the nonsense about China, unless you’ve lived there. The fact is, most Chinese wish their country had democracy with its accompanying freedoms, particularly, speech and assembly.

    Funny, it’s always those who have power who rail loudest against democracy.

  18. speed Gibson Says:

    what a dumb ass http://news.bbc.co.uk/2/hi/americas/8627799.stm

    I wonder….isnt S Korea and Venz about the same size? and Venz is swimming in oil… just goes to show ya that the character and ethics of the people make the difference in prosperity, etc Latin American will always be bringing up the rear

  19. Juancho Says:

    Roger said: “None of them or even private investors are going to invest much in a place where contracts have no value.”

    That’s almost certainly the bottom line. Investing in Ven. right now is like lending money to a drunk cousin. The main thing about that cousin is that he’ll have no compunction to ever pay you back, ergo, only a fool gives him any dinerao.

    Arturo has his ideas, but what, in tangible terms, is actually getting done?

    Junacho

  20. loroferoz Says:

    Weird and weirder…

    Expect more of this as the going gets rougher. And it will get rougher, thanks in no small proportion to the Arepera Socialista, Venirauto, and other vaporware.

    But you must be desperate to look for investors in the Empire (c). By the way, is there a rationale for Chavez spewing his usual bile about the U.S. of A. in the first place? For all the bile and money spent they have never gotten Venezuelans into.

    Now Hugo and his band learn that there IS a good reason for putting politics, economics, lawyering, science and engineering considerations in nice little separate compartments. It means acting professionally. You take one, say politics, and blow it out of all proportion and then, nobody believes that you are serious about the others. You backtrack and even the fanatics who bought your all-is-politics approach will believe you are not serious. They will go down in history as the most seriously amateurish bunch to ever try and govern Venezuela.

  21. Roy Says:

    M_astera and Deananash,

    Here is a Heinlein quote that sums up the dilemma over types of government:

    “Democracy is based on the assumption that a million men are wiser than one man. How’s that again? I missed something.”

    “Autocracy is based on the assumption that one man is wiser than a million men. Let’s play that over again, too. Who decides?”

    It is exactly those contradictions that forced the invention of Constitutional Democracy. And even though that seems to be working out better than any of the other systems ever tried, I am convinced that it can be improved upon.

    Authority and responsibility for both the electors and the elected need to be balanced better to prevent the slide toward populist leaders and “bread and circus” policies.

    It would seem to me that after 200 plus years of data accumulated from the experiment in constitutional democracy, we should be able to build a computer model that we could use test the results of various changes to any constitution to improve the design of the system and insure that there is sufficient negative feedback to prevent the extremists from gaining control and sufficient dampening mechanisms to absorb the shock of changing conditions.

    If we designed airplanes or buildings like we currently design constitutions, the result would be disastrous. I think the time has come to apply sound scientific and engineering principles to the design of new political systems, with the object being to find a balance that provides the maximum personal freedom, institutional stability and security, and economic efficiency that can be achieved.

    Note: That balance may be different for different cultures. The computer models should be flexible enough to “personalize” a constitution appropriate to the cultural norms and societal development of the country in question.

  22. deananash Says:

    Roy, I’m with you all the way. Let’s try some newer ideas, not merely older ideas (read totalitarianism) dressed in new clothes.

    I think that your idea of using computer modeling to forecast results is interesting and worthy of experimentation.

    The Chinese have an interesting concept of land ownership. ALL land is owned by the government and leased to investors, builders, etc…for 75 years. This creates a never ending stream of tax revenue (every 75 years) in addition to any taxes on sales of the lease of the property during the 75 year period.

    I’m not saying it is the right answer, I’m saying it is a worthy experiment. After all, the land was here long before us, so why should any one of us “own” it? As to owning the building, etc…if you can’t get a fair return before the 75 years is up, then perhaps you shouldn’t build it.

    The main point is: Let’s try some new ideas.

  23. deananash Says:

    Roy, repeated experiments have shown that “None of Us Is As Smart As All Of Us.” You can read about all about this in James Surowiecki’s excellent book, The Wisdom of the Crowds.

    There are some important caveats to this, so beware simply skimming it. The most important being INDEPENDENT THINKING. My guess is that you’re already well familiar with the concept, so I’m really providing the information for other readers.

  24. loroferoz Says:

    m_astera:

    “Authority and responsibility for both the electors and the elected need to be balanced better to prevent the slide toward populist leaders and “bread and circus” policies.”

    To prevent that, why not take away the possibility at all?

    Don’t want citizens begging like dogs? Don’t give out ANY free stuff. Represent everything as paid, and paid dearly in taxes and lost private revenue. Don’t want circus? Eliminate the hoops the citizen has to go through. Don’t want a sense of entitlement? Don’t code ludicrous wishes (like work for everyone) of a happy-go-lucky world into law, and even less into Constitutions. Take the very concept of free lunches out of government. So there will be no one offering them then.

    Don’t want tyranny? Don’t build the legal tools and the armed bodies for the would-be-tyrant.

    “None of Us Is As Smart As All Of Us.” True enough. What it means is that a person(s) will find the right answer(s) to a problem and then the rest will see the results, imitating and improving on a good idea. So the good ideas survive and are improved upon. The bad ideas do not go far.

    This “statistic intelligence” DOES NOT APPLY to government. Enter government, then, for bad ideas to survive and prosper. Government makes an idea law and then enforces it. If it’s good, well we have a good thing enacted through a gun barrel, if it’s bad, everyone is stuck with it and still you have the gun barrel. Also, government makes it seem cost free to implement terrible ideas because they seem “right” and because it seems that the usual restrictions and caveats (like aggravation, loss of money and even life) do not apply.

    Ah, and whether the INITIAL part of the lawmaking process is more or less democratic, the redaction and enforcement of law ALWAYS ends in the hands of government officials, most of them thoroughly unaccountable.

  25. m_astera Says:

    Deananash wrote: “it’s always those who have power who rail loudest against democracy”

    Are you referring to me? It is to laugh. I have worked most of my life as a craftsman and designer. These days I write and consult on health and sustainable agriculture. What power I have is only in the ideas I promote; I have no power over persons; I don’t even have any employees these days..

    I stated the problem with democracy above. Especially in our modern media manipulated societies, the political money goes towards convincing the masses that one candidate is more likeable and will give them more. Competence has little or nothing to do with it. Could chavez have won an election based on competence and successful experience? Not a chance. Neither could Obama or GW Bush. But it is easy enough to manipulate public perception, especially the ignorant, through the media. It’s all sound bites and BS, so that one puppet or another gets into the position where they can do the most for those who paid for the campaign ads. Is it not so?

    I am not in favor of autocracy, unless of course some supremely competent and wise individual should ascend to that position, one who truly had the best interests of all at heart. From what I see, those who might fit that role will have nothing to do with the filthy political systems of today. Again, as the Russians put it, scum rises.

    I’m glad that Roy brought up the idea of the computer model. It does not provide a solid answer to the most vexing problem, how to keep the scum from rising, but please take a look at the ideas from Ricardo Johanssen that a friend recently sent me, based on internet communications and, for lack of a better term, an informed and competent “democracy”. Here’s the link to a short free e-book he wrote. I think the ideas are worthy of consideration and discussion:

    http://www.upworldgov.org/oms/wsite/gov/documents/gov_documents/site/ebooks/emergence_from_illusion_ebook.pdf

    The book is new, February 2010.

  26. Kepler Says:

    Computer models? Give me a break. Computer models are as good as people who make them, no matter how much data you pour in.

    What system do you propose then? According to taxes as in the XIX century? Sure, as people back then were wiser and in the XVIII century even more so. Let’s all look at our favourite picture of the “Fathers” and sigh.

    Por favor!

    Yes, let’s look for new ideas, but let’s not get carried away as Pol Pot did. :-)

  27. loroferoz Says:

    Computer models are inadequate versions of reality. At best, good approximations.

    I am in favor of letting individuals decide because I think, really, that society and the physical world around it constitute an intelligent reality. It is complete, and infinitely more intelligent than any given computer model, and probably wiser than any given individual.

    If someone builds a good computer model or a better way of associating, let they lead by example. Their prosperity and harmony can be imitated.

    Letting governments and the individuals in charge of them decide what is a good idea and what is a bad idea is just a way to perpetuate bad ideas, or worse, bad-intentioned ideas.

    Also, letting people decide is the truly ethical way to go. If someone wants to go that way or the other, let him or her go, on their time and money too.

    Which has nothing to do with voting a government through some more or less democratic means and then letting it impose any idiotic policy because it sounds good and because it seems that ethical and physical constraints are of no concern where the government is involved.

    A truly democratic, ideal government that would let individuals agree, decide and choose in every step of the process how their resources will be used and how the law will be enforced tends to act like NO government and more like the market.

  28. firepigette Says:

    Computer models?Ridiculous.

    As for the majority always being right- also ridiculous.

    The lowest common denominator is the majority or, the status quo.

    It takes independent thinkers a lot of struggle to overcome the status quo that will create the next higher step in evolution.

  29. Antonio Says:

    Are Computers Models better? , let the computers make decisions?

    Yeah right, HAL 9000 is the better Choice; it will wipe out all human presence in The Earth.

    It is the better and rational decision, after all, human race is a menace that only they are doing is multiplying like a cancer, and they will eventually destroy the precious Earth and all the rest of precious species. Civilization is only destroying natural and environmental balance.

  30. GeorgeS Says:

    Arturo: You clearly know nothing about oil and I am amazed you don’t even get the cynical and hypocritical act of Ramirez going to Washington looking for investors.

    But more importantly I ask you:

    If I recall correctly you defended the Arepera Socialista. Then you told us your epic battle to get Indepabis to shut down a drugstore because they increased the price of a product by 30% in the absence of any price increases.

    To be consistent, shouldn’t you now go to Indepabis to ask them to shut down all of the Areperas Socislistas because they increased the price of ALL areperas 50%, despite there being no justification for it since they were opened less than 4 months ago?

    This whole thing proves you are the only fanatic around here.

  31. GB Says:

    @ Arturo: I say Chavez just lead by example and dump the oil economy. Ban petroleum powered cars and trucks and , and go whole hog on total electric…electric trains (freight and passenger), public transport (mono-rails, etc.), electric cars, bicycles (folding type so they fit on the trains), and walking. Now that’s revolutionary thinking. Of course, get the electric power in clean systems, i.e., solar and wind farms in the llanos, tidal/wave/thermo power from the sea. Forget oil all together. With a population of less than 30 million such a plan is plausible.
    Alas…Chavez has not the cojones, vision, leadership skills, or engineers to pull it off.


  32. GB: The irony is that Chavez’ “revolution” is trying to take Venezuela into the 19th. Century, while the people want to be taken into the 21st. Century.

  33. m_astera Says:

    That was not I who suggested computer models for society or government. Those who bothered to look at the link I posted to Ricardo’s ideas know that isn’t what he is proposing either. The idea is for us to use computer communications to control government.

    The dialogue here is an example of how this could work: informed people, most of whom are affected by the topics being discussed. Those who are uninformed, or promoting a self-serving agenda, are soon outed as such.

    Applying that to a democratic model, only those directly affected by a proposed decision would be allowed to vote, and then only after they had demonstrated their knowledge of the facts and situation.

    In that model, the power moves from the sovereign individual upwards, not from the government downwards.

    On a neighborhood, city, state or national level, the appointed representatives follow the directions they are given by those who agreed to appoint them, on each and every issue. There are no lobbyists, and each representative can and will be immediately recalled and dismissed the first time they fail to follow the directives of those who appointed them. There are no terms of officeholding; the appointee serves as long as he follows the wishes of the appointers, or until he decides to do something else.

    That was not possible in the past, when communication happened slowly. With the internet as the tool of communication it would work just fine.

    Certain group decisions do need to be made, and should be made by those with the knowledge of the situation and the intelligence to do so. That is a far different thing than 51% of the people voting to rob the other 49% and calling it democracy.

    ~

    Re computer models, I was just reading that the reason air traffic in Europe has been shut down these past days is because of a computer model simulation of the path of the ash from the Iceland volcano, not due to any actual observations. Said computer model of the ash path was the work of the MET office in the UK, you know, the ones who predicted a “barbecue summer” last year.

    One may rest assured that those who were directly affected by the decision, such as the airlines and paying passengers, had no input.

    Several European airlines have done test flights yesterday and today (Sunday) and reported no problems at all. Miltary exercises involving the air forces of seven NATO countries are ongoing right now.
    http://www.usafe.af.mil/news/story.asp?id=123199666

  34. Luis G Says:

    m_astera, your hypothesis suffers from a logical flaw that’s been proven over and over in history by the simple fact that power corrupts. So your ideal incredibly wise leader with the best of intentions will be corrupted once he/she gets on charge.

    There have been empirical studies that prove Democracies have a better performance than authoritarian models.

    This is one of them:

    http://www.soros.org/initiatives/washington/articles_publications/publications/halperin_20041217

    They even explain why your argument is flawed:

    “Although holding free elections is what commonly defines democracy,
    what makes it work is the way it disperses power. Consequently, in contrast
    to most autocratic governments, a broader range of interests are considered
    on a more regular basis. This increases the likelihood that the priorities of
    the general public will be weighed. Indeed, the argument that authoritarian
    governments can ignore special interest groups and therefore make decisions
    that are for the overall good of the society is based on a series of highly
    dubious assumptions. One is that the unelected leaders in these systems actually have the interest of the public at heart. The behavior of Fidel Castro
    in Cuba, Kim Jung-Il in North Korea, Alexander Lukashenko in Belarus,
    and Hassan Ahmad al-Bashir in Sudan, to say nothing of former Iraqi dictator,
    Saddam Hussein, would strongly suggest otherwise.

    Another assumption is that authoritarian governments don’t have to
    satisfy their own special-interest constituencies. In fact, most authoritarian
    systems are built on the foundations of extensive patronage networks upon
    which they rely to stay in power. Although typically shielded from public
    view, these networks have enormous impacts on economic opportunity
    and development. The separation of powers inherent in a democracy acts
    as a constant reminder to the public that the central government’s powers
    are limited. Thus, it encourages the expansion—and the independence—of
    the private sector. This, in turn, fosters a climate of innovation and entrepreneurship, the engines of economic growth.”

  35. GB Says:

    Miguel: That’s the significance of the Bolivarian Bicentenerio…200 years difference.

  36. captainccs Says:

    On April 19, 1810 Vicente Emparan said: “¡Pues yo tampoco quiero mando!”

    Now, if only Esteban would do the same.

  37. moctavio Says:

    Funny, I just tweeted:

    Make me your leader, so that I can resign the next day…

  38. captainccs Says:

    I guess we are both wishing the same thing…

  39. deananash Says:

    m_astera, actually, I wasn’t specifically referring to you, but rather, stating a generality that has proven itself to be true.

    As for computer models, I believe that loroferoz is correct, they’re only as good as the initial inputs, etc…

    What I was envisioning was something more along the lines of “Second Life”, a real, yet virtual free market. Economists are learning a lot more about human nature and economics via this ‘computer-based’ “model”.

    Why can’t the same be applied to Democracy, government programs, etc…?

    I concur with loroferoz, the ultimate solution to preventing corruption is to limit power. Including the power to hand out the clearly misnamed “freebies”.

  40. captainccs Says:

    Models have many shortcomings. To start with, they are a simplification of the real thing and often an oversimplification. Next, models often have the designer’s biases built in. Third, GIGO: garbage in – garbage out. That said, well designed and properly backtested models can be very useful. A friend of mine has been investing in the stock market for quite some time strictly according to his computer model. He buys top quality market data to feed into the model. No rational investor would pick the picks his model produces, still the model is doing extremely well leaving the indexes in the dust.

    The problem I see with a model controlling human behavior is that humans have free will and that free will does not necessarily maximize a quantifiable utility function of some sort like a stock picking model does. How exactly do you measure happiness? How many points does walking barefoot in the sand count for?

    A republican democracy is a very inefficient system but it is the best we have for large groups of people. Families, clans and tribes can get away with simpler systems but a modern nation state cannot. I stress “republican” because a pure democracy is mob rule, rule by a majority. In a republican democracy, majority rule cannot trample individual rights, human rights. In this sense, a republican democracy is more limited than a pure democracy. In Venezuela we are seeing the ill effects of a government without limits.

    Good government is limited government, the more limited, the better.

  41. loroferoz Says:

    There is a fundamental flaw in the thinking that sees the government as a way to solve any and all problems.

    Government has a purpose and it is not solving everybody’s problems. The government has powers. To tax and to police. The money is handy, but it is extracted by force or via a monopoly (more force here). The power is handy too, but it is force. So, government should be of use when the use of force is required. For antisocial, violent individuals who actually trample the rights of others.

    Forcing government to solve your problems or to give hell to somebody you do not like is like forcing policemen and tax collectors to be your valets, your serfs, or your personal goons. Dangerous, because when you make these persons lose their mission, they get out of line and begin to develop their own set of interests on the side with their new powers.

    That’s when democracy, which should be about electing administrators and deciding how to manage the problems that require government becomes mob rule.

    In a sense, the adorers of the state seem like the sorcerer’s apprentice of many tales; thinking that every problem can be solved by “magic”, he is invariably defeated, either by unintended consequences of his spells or by his inability to control magic and himself.

  42. Kepler Says:

    “The government has powers. To tax and to police.”
    Is that a physical law? A mathematical axiom? I missed that at school.
    It is funny how people like Loroferoz insist on delegating security to the state, but not other things. Why not let people defend themselves?
    The real reason why defence is the only sacrosant thing for some is the PR from Lockheed-Martin and the like. Mind: I do agree defence has to be in the hand of the state, but also other things. I do not think the areas of state involvement are some natural law but of evolution and times and they are always under constant change.

    The constitution of Texas has a part allocating a certain amount of the state’s budget to books for children at school. I think that is great and should be the norm: free schools for everybody up to high school and free books. The problem is how to implement it all. There are solutions.

    In the very capitalist US children get the maths books from the state, i.e. from your taxes.
    In Venezuela they don’t. And I tell you: school books in Venezuela are much more expensive than elsewhere and a normal humble worker would have to give at least a whole month’s salary to buy those books and notebooks for one of his children.
    There is no way Venezuela will ever become a developed nation like that.

  43. Kepler Says:

    Oh…did you see this?

    http://news.bbc.co.uk/2/hi/americas/8627835.stm

    George Washington borrowed a couple of books from the public library.
    Cool they had one.

    Benjamin Franklin was a bright fellow, no doubt about it:
    http://en.wikipedia.org/wiki/Public_library#United_States

    Thanks to taxes

  44. Roy Says:

    Wow! A lot of people took what I said and read a whole lot into it that I didn’t say or mean. However, I am gratified that my thoughts could generate such a response.

    When I said that we can design a better constitution using computer modeling based on the accumulated data of over 200 years of experience in constitutional democracy, I meant that and no more. I do not propose to let computers make command decisions. All I want to do is to design a set of rules that that (and I will quote from my previous post) “maximize”:

    1) Personal freedom

    2) Institutional stability and security

    3) Economic efficiency

    You can’t have a maximum of any of these three things without sacrificing the other two. Finding the correct balance of these three values is what politics is all about. As I indicated above, there is no particular formula that would fit all cultures. My idea of using computer modeling is to provide a rational quantitative framework for a design process that, till now, has been purely intuitive. The products of that process have been tested by trial and error on live subjects (Us!). All too often, the failures have resulted in massive destruction and death. In systems design, one tests their designs before implementing them. Shouldn’t we apply the same caution to the most important system humans have implemented? I refer to the very government that is instituted among men to “form a more perfect Union, establish Justice, insure domestic Tranquility , provide for the common defense, promote the general Welfare , and secure the Blessings of Liberty to ourselves and our Posterity”?

    I fully recognize that what I am proposing is a massive undertaking. It will require us to invent methods to quantify values in the studies of sociology and political science. It will require that hundreds of years of historical social and political trends be analyzed dispassionately to produce the numerical data needed to test the models. Off-hand, I would say that this is a project on the scale of decoding the human genome.

  45. Roy Says:

    Here is an example of an idea for a modification of the current U.S. political system that I think has merit, and that I would like to test:

    The current concept of the bicameral congress was a modification of the English system which had the House of Lords, representing the nobility and the House of Commons representing the rest of the population. Well, since we no longer have a hereditary nobility, perhaps it is time to rethink this structure of the congress.

    The original concepts of democracy were founded on the idea that everyone is equal and that their vote should count equally (one man, or woman); one vote). However, history has shown that, under this system, the population has a tendency to vote themselves largesse from the public treasury. As a result, the government slowly grows larger and more intrusive as more economic activity moves from the private to the public sector. This is an example of “systemic instability”. I would propose that one house of congress represent the economic interests of the population, while the other represent the common social interests of the population.

    The representatives of the Economic House would be voted upon by popular vote, but each person’s vote would count in proportion to the amount of tax they pay. Under this system, any tendency of the wealthy to avoid payment of taxes would be counter-productive, since it would result in decreased influence in congress. Basically, everyone’s influence in this legislative body would be proportional to the amount of money they contribute to the operation of government. Think of it as a share-holder of a corporation voting their shares. What could be more fair than that?

    But, of course, a nation is not just a corporation or an economic partnership. A nation is also a social and cultural entity. Thus, the other house of congress should be constituted to represent the hopes, dreams and desires of all the population. We could make this a “one man; one vote” institution, but I have what I think is even better. To make this vote “mean” something real, I would propose that this vote be “earned” by each citizen by contributing two years to government service. That service might be military, or it might be working in soup kitchens. In this way, this house of congress would represent not just “the people”, but those that cared enough about their country to work for it. Besides which, I think all cultures need some sort of “rite of passage” to mark adulthood.

    Having proposed the above, I will admit that although I think (intuitively) that it is wise and has merit, I don’t “know” that it will work. Maybe the military would monopolize the People’s House resulting in fascism. Maybe the corporations would monopolize the Economic House resulting in turning the whole country into a “company town”. I don’t know, and I am not smart enough to foresee all the ramifications.

    This is where the computer modeling comes in. I want to plug my system into the model and test it to see how it functions. Will it be stable over time? Will it adjust to changing conditions and shocks from outside influences?

    If we had this tool, my ideas could be tested without having to resort to trial and error on “live subjects”. Because, as good as I think my ideas are, I would not want to be solely responsible for implementing them on my fellow man. Even the best intentioned person or group of persons can make mistakes. Whosoever finds themselves with such awesome responsibility deserves to have the best tools possible at their disposal to make those decisions.

  46. Roberto N Says:

    Kepler: Pick a different US state next time! While school books are free up to high school in Texas, the Texas School Board (or whatever they call themselves) has a great record…. for banning books! They’ll ban anything that that even has a whiff of going against the mostly conservative party line they espouse.

    Right idea, wrong example.

    Many other US states provide “free” books to school children. By free I mean, subsidized by taxpayers, of course.

    Your point about affordability in Venezuela is well made.
    Asi no se educa a un pueblo.


  47. [...] We despise you and dislike you, but please gringos send some dollars, the arepa project ain’t work… [...]

  48. Kepler Says:

    Roberto,
    Actually, I reckon Texas is the best example. If even that state within the USA has books for children, why on Earth don’t Venezuelans see that as a priority?

    A wide range of good public libraries and some very basic but solid tools for children should be provided.

    We just got the priorities damned wrong.We have whiskey that is cheaper than in Scotland and we have petrol that is less expensive than anywhere else on Earth. A Venezuelan child almost needs an upper-middle class parent to get all the books she needs for the year.
    A primary school teacher could not afford to rent a house in Venezuela only from his salary.

    Back to the theme on taxes: I think above all we should be ready to adapt if need be, reduce or augment the tasks carried out by the state depending on the current situation. To do that I think the best is to
    guarantee a very public and fair discussion of all pros and cons, real
    debate as I often say and not parallel dialogues to constituencies or interest groups.

  49. Roy Says:

    To all of those who claimed that I meant that “government” is the panacea to all human problems:

    That is absolutely incorrect. As government goes, I am a minimalist. My ideas are meant to insure that government does not grow unabated.

    The fundamental problem with representative democracy (and many other types of human organizations) is its tendency to grow and become more intrusive. The U.S. Bill of Rights was an attempt to “limit government” by defining what it was prohibited from doing. Sadly, this attempt has failed, since nearly all of those prohibitions have been abridged by politicians (some even well-meaning) out of expediency.

    I see these artificial limits as”patches” to correct the flaws in the original design. If the system has the correct balance of powers built in to it, such artificial prohibitions should not be necessary. The very best machinery and systems are simple and elegant and don’t need excessive complexity.

  50. m_astera Says:

    I tried posting this twice yesterday, one more try:

    That was not I who suggested computer models for society or government. Those who bothered to look at the link I posted to Ricardo’s ideas know that isn’t what he is proposing either. The idea is for us to use computer communications to control government.

    The dialogue here is an example of how this could work: informed people, most of whom are affected by the topics being discussed. Those who are uninformed, or promoting a self-serving agenda, are soon outed as such.

    Applying that to a democratic model, only those directly affected by a proposed decision would be allowed to vote, and then only after they had demonstrated their knowledge of the facts and situation.

    In that model, the power moves from the sovereign individual upwards, not from the government downwards.

    On a neighborhood, city, state or national level, the appointed representatives follow the directions they are given by those who agreed to appoint them, on each and every issue. There are no lobbyists, and each representative can and will be immediately recalled and dismissed the first time they fail to follow the directives of those who appointed them. There are no terms of officeholding; the appointee serves as long as he follows the wishes of the appointers, or until he decides to do something else.

    That was not possible in the past, when communication happened slowly. With the internet as the tool of communication it would work just fine.

    Certain group decisions do need to be made, and should be made by those with the knowledge of the situation and the intelligence to do so. That is a far different thing than 51% of the people voting to rob the other 49% and calling it democracy.

  51. m_astera Says:

    Luis G wrote:

    “m_astera, your hypothesis suffers from a logical flaw that’s been proven over and over in history by the simple fact that power corrupts. So your ideal incredibly wise leader with the best of intentions will be corrupted once he/she gets on charge.”

    Au contraire, Luis. It is not that power corrupts. It is that those who are corrupt are drawn to power. They hide their essential corruption behind a facade of public service or some other ideology. As I have said a couple of times already, scum rises.

    Until we can identify and eliminate psychopaths and sociopaths from positions of power, no system will work. That IS the essential problem.

    If you are not familiar with the book Political Ponerology I would highly recommend checking it out. A number of people died putting that information together and getting it published.

  52. m_astera Says:

    One more and I’ll be quiet, but I want to say, this is one great thread.

    Re computer models and gigo, I was just reading that the reason air traffic in Europe has been shut down these past days is because of a computer model simulation of the path of the ash from the Iceland volcano, not due to any actual observations. Said computer model of the ash path was the work of the MET office in the UK, you know, the ones who predicted a “barbecue summer” last year.

    Has anyone else noticed that they are now talking about “invisible” ash?

    One may rest assured that those who were directly affected by the decision, such as the airlines and paying passengers, had no input.

    Several European airlines have done test flights yesterday and today (Sunday) and reported no problems at all. Miltary exercises involving the air forces of seven NATO countries are apparently ongoing right now.
    http://www.usafe.af.mil/news/story.asp?id=123199666

  53. Kepler Says:

    Miguel,
    I don’t understand why you mentiont that to me. I agree 200% with that.
    This government is not just very bad, it is utterly destructive. I am not talking here about universities, though. I am talking about something very basic any government should do once Chávez is behind bars or in Mars, something we should have done before, something Chavez missed doing
    during this oil boom, something we are further away from.

    I am not for “open universities for everybody no matter what”.
    I just want the state to provide good tools for the initial stage of schooling, good teachers for primary school, transparency, competitiveness.

  54. loroferoz Says:

    Well, Kepler.

    Those are the powers of government. Whether you like them or not. Those are the powers that make government different from any private corporation, association or club, private security firm or ragtag band or group of friends.

    That IS power. Recognize it.

    You can reject an offer, refuse to sign a contract, refuse to pay even fees you agreed upon. Taxes are another matter. You can tell a private guard to stick it if you are not on the premises he is guarding, you can refuse to let him run through your pockets. You can defend yourself from anyone entering your house or property, or trying to take you away. Policemen/army are another matter.

    There are associations that ask for donations, get pledges, or make a profit and then use them in worthy causes. There are companies that will provide security or various kinds, for a fee, who have armed personnel.

    But try to collect tax by your own initiative, and you are a mafioso. Try to imprison, dispense justice and execute sentences by yourself, and you are a vigilante.

    Even the “good things” that the government does are done with tax money collected forcibly or with the profit of enforced monopolies, in case we did not notice.

    I almost, almost, go the whole hog, to believe also that police could be private, just watch me enumerate the successes of the Venezuelan state in policing crime and itself, if I had a fingerless hand I might just do it!. But somebody must judge, punish and award compensation. And though there are proposals to make that private, or at least decentralized, it’s not likely that I will believe in things in which we have no experience whatsoever.

    And like the Swiss and many other countries, we could dispense with 95% of the goon games that go on under the guise and title of “National Defense” in the U.S.A. or Venezuela, and still feel pretty safe. Much safer, indeed.

  55. jz Says:

    Hey, Miguel, I agree with you that the U.S. companies aren’t going to be splurging in Venezuela any time soon, but China just kicked in $20 billion.

    http://online.wsj.com/article/SB10001424052748703594404575191671972897694.html?KEYWORDS=Venezuela+and+China

    What are your thoughts on that?

  56. Steven Says:

    I see that this discussion has drifted from the original posting, which was Venezuela seeking a meeting with the US Energy Secretary. Even if it had happened, such a meeting wouldn’t have done anything. The Secretary has a long-term goal, and oil is not a part of it.


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